Warren Buffett has plans for ‘bigger fish to fry’ and needs Japanese stocks to make it happen, says Mark Mobius

• Legendary emerging markets investor Mark Mobius thinks Warren Buffett has plans for something big.

• Buffett raised his stakes in top Japanese trading companies, which could play a role in a later deal.

• “I think he’s got a bigger fish to fry. I think he’s got plans for something else,” Mobius told CNBC.

Warren Buffett’s decision to invest more money in five major Japanese companies may be a prelude to something bigger, said billionaire investor Mark Mobius.

On Tuesday, Buffett’s Berkshire Hathaway raised its stake in Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo to 7.4%.

In an interview on CNBC later in the day, Mobius speculated that Buffett likely has something else up his sleeve.

“I think he’s got a bigger fish to fry. I think he’s got plans for something else. And he’s already mentioned that he’s planning some big deal, which may need the help of these Japanese trading companies,” Mobius said.

In his own CNBC appearance Wednesday morning, Buffett didn’t reveal a larger master plan, but instead said the Japanese stocks seemed like a good investment.

“I just thought these were big companies. They were companies that I generally understood what they did,” he said. “And they were selling at what I thought was a ridiculous price, particularly the price compared to the interest rates prevailing at that time.”

Mobius also theorized that Berkshire Hathaway’s sale of yen bonds may also have to do with Buffett’s stock market play. But Buffett said this was to protect his company from exchange rate risks.

Buffett and Greg Abel, his planned successor, are open to potential opportunities and have encouraged the Japanese companies to reach out.

“He’ll answer the phone on the first ring,” Abel said of Buffett. “And we’ll never run out of money. They can call us anytime.”

For his part, Mobius acknowledged that the Japanese stocks have attractive price-to-earnings ratios and pay dividends.

But they appear to have already peaked, and he wouldn’t buy them.

“Frankly, I would not be involved in buying these companies. The return on capital is not high,” Mobius said. “The prices have just gone up too much, I believe.”

Read the original article on Business Insider